Repossi Diffusion S.A.M. v. GS Distribution, Inc.

Full title: REPOSSI DIFFUSION S.A.M., Plaintiff, v. GS DISTRIBUTION, INC., Defendant

Court: United States District Court, S.D. New York

Date published: Dec 22, 2005

05 Civ. 2757 (PAC) (S.D.N.Y. Dec. 22, 2005)

Opinion

05 Civ. 2757 (PAC).

December 22, 2005

MEMORANDUM ORDER

PAUL CROTTY, District Judge

Defendant moves, by Order to Show Cause, to vacate Judge Chin's injunction of April 21, 2005 and for an order of attachment of approximately $5,000,000 worth of jewelry owned by plaintiff and currently held by Brinks. The motion is denied.

INJUNCTION

With regard to the injunction, defendant alleges that Judge Chin's injunction was improperly issued based upon a misrepresentation of plaintiff's counsel. Defendant contends that "Judge Chin was hoodwinked into thinking the contract had been terminated. . . ." (Rockitter Aff. 18, Dec. 16, 2005.) Even a casual reading of the transcript of the conference held before Judge Chin on April 18, 2005 reveals that defendant's argument is a complete distortion of what transpired at argument. Contrary to defendant's assertion, Judge Chin was not misled; nor were there any misrepresentations.¹ Defendant's counsel called to the Judge's attention more than once that the contract had not been properly terminated, but he also argued that the contract was void. The following conversation sheds light on this contradiction:

1 It is significant that the principals of both parties were in attendance at the hearing, and that Judge Chin took offers of proof from both sides. Eventually, he determined that no hearing was necessary before the preliminary injunction could be granted.

Mr. Rockitter: It's our position that we were not given [the notice called for in the contract].

The Court: All right. That's fine, but I think it is your position that the agreement is illegal in any event.

Mr. Rockitter: That's correct, Your Honor.

The Court: Okay, all right. I think there was no disagreement that the defendant's rights to use the Repossi name and mark exist only under the agreement, and that if the agreement is either unenforceable, void or whether it's been terminated, the defendant's right to continue using the mark has come to an end. We are in agreement with that. Right?

Mr. Rockitter: Yes, Sir.

(Conference Tr. ("Tr.") 3:6-3:17, Apr. 18, 2005.)

Later, when asked by Judge Chin "what legal right" GS has "to continue using the [Repossi] name or holding the [Repossi] jewelry," Mr. Rockitter admitted: "Judge, we don't have a legal right. . . ." (Tr. 8:16-8:18.)

Before ruling, the Judge specifically inquired about whether the appropriate notice was given and after hearing both counsel stated:

I'm going to grant the preliminary injunction. . . . What is important is that GS has no legal right to continue using the mark. Even under GS's theory, the contract is void and unenforceable. There is no legal basis for it to continue to use [the] Repossi name.

(Tr. 22:21-23:1.)

Bankruptcy Judge Gropper may have found that there were technical inadequacies in providing the termination notice (e.g., the notice and cure letters between French speaking individuals were in French, not English, as called for in the contract; the final notice was sent to defendant's attorney rather than to defendant). More significantly, however, he found that defendant was estopped from changing its legal position that the contract was void and unenforceable. The defendant cannot shift its arguments to suit its momentary convenience, and have a contract void and unenforceable for some arguments, but still valid and improperly terminated for others.

Defendant points to no reason, much less a good one, why it should be allowed now to change the position that it took in April 2005 that the contract was void and unenforceable. Indeed, that is still one of its positions today. Accordingly, there is no basis for modifying the injunction.²

2 The Court also notes that this is another in a series of attempts by defendant to have this Court modify or withdraw the injunction. The current argument is little more than contrivance.

ATTACHMENT

With regard to attachment pursuant to Federal Rule of Civil Procedure 64, which incorporates New York C.P.L.R. Article 62, the Court declines to issue an order of attachment. Attachment is a harsh remedy and is addressed to the discretion of the Court. Considering all the equities in this matter, including the long delay in any payment whatsoever by defendant; the open question as to whether defendant promptly and fully complied with Judge Chin's injunction (Judge Chin issued separate instructions on several occasions to defendant directing compliance with the April 21, 2005 injunction); defendant's failure to file in Bankruptcy Court a reasonable business plan for the disposition of the Repossi jewelry; the Bankruptcy Court's complete rejection of defendant's plan to resell the jewelry at "private sales;" and the Bankruptcy Court's direction that the Repossi jewelry be, at long last, returned to plaintiff, the Court declines to issue an order of attachment. The attachment request smacks of desperation, and is clearly a last minute attempt to frustrate the return to plaintiff of the jewelry that it clearly owns.³

Plaintiff is authorized to bring whatever motions were previously authorized by Judge Chin before the notice of bankruptcy. The Court has not found any order in the files releasing the $250,000 plaintiff previously posted as security for the April 21, 2005 injunction. The Court assumes and directs that the security remain available, until released pursuant to further order of the Court.

The defendant's motion brought on by Order to Show Cause dated December 19, 2005 is denied in all respects.

SO ORDERED.